The State provides many goods and services. Ideally, it restricts itself to public goods, such as roads and schools, which could be supplied either not at all, or only inadequately, by the market.

Beyond this, states generally aim to compensate for social differences by redistributing income among the various levels of society, generations and regions. The state can even transfer income between different periods of time by taking on debt in a phase of economic difficulty and repaying it in better times. The intention behind this is to smooth the fluctuations of the economic cycle. The extent to which the state becomes involved in all its functions can be measured by the ratio of its expenditures to gross domestic product. In Germany, this figure, known as the public sector share, is just under 50%; in other words, the state accounts for approximately half of economic output.